I have been hearing about this same trend right here in my own county. So there is no doubt this is also happening on a national scale.
But, does it work? Maggie Thurber of Thurber’s Thoughts did a little poking around at the office of the Comptroller of the Currency, Administrator of National Banks department of our wonderfully, caring U.S. government to see about that question. There she discovered a few enlightening paragraphs in the mortgage metrics report of the third quarter of 2008.
For the first time mortgage metrics have been gathered for these modified loans and the report is not very encouraging.
The conclusion of the report, in brief, is that delinquencies continue to rise, foreclosures and other actions leading to home forfeiture also continued to rise, and loan modifications were associated with high levels of re-default.”Maggie was alarmed at the re-default rates of these sort of loans and pointed out the following paragraphs in the report mentioned above:
For loans modified in the first quarter of 2008, more than 37 percent of modified loans were 30 or more days delinquent or in the process of foreclosure after three months. After six months, that re-default rate was more than 55 percent. For loans modified during the second quarter, the three-month 30+ day delinquent re-default rate was more than 40 percent.For loans modified in the first quarter, more than 19 percent were 60 or more days delinquent or in process of foreclosure after three months. That rate grew to nearly 37 percent after six months. For loans modified in the second quarter, that re-default rate was more than 21 percent after three months.
It appears as if more than half the modified loans went right back into default within six months.
But never mind all of that. We’ll continue to toss coins in the beggar’s cup while convincing ourselves that we are actually helping them.
YAY! We are helping the less fortunate. They just don’t realize it.
We are so awesome!
